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Are gambling losses tax deductible?

TL;DR

Gambling losses are tax deductible, but only to the extent of gambling winnings and if you itemize deductions.

Detailed Answer

Gambling losses can be deducted on your tax return, but only if you itemize deductions on Schedule A and only up to the amount of gambling winnings reported as income. This means if you have $5,000 in gambling winnings, you can deduct up to $5,000 in losses. However, if your losses exceed your winnings, the excess is not deductible. For example, if you have $7,000 in losses but only $5,000 in winnings, you can only deduct $5,000. It's important to maintain accurate records of both winnings and losses, including receipts, tickets, statements, or other documentation.

Where to Put It on the Tax Form

Report gambling winnings on Form 1040, Schedule 1, and deduct losses on Schedule A, Itemized Deductions.

Real World Example

John is a frequent casino visitor and won $10,000 over the year but also lost $12,000. On his tax return, he reports $10,000 as income and can deduct $10,000 in losses, but the extra $2,000 loss is not deductible.

Calculation Required

A calculation is required for this deduction.

Calculate the total gambling winnings and compare them to the total gambling losses. Deduct losses up to the amount of winnings.

Audit Risk & Documentation Tips

To minimize audit risk, keep detailed records of all gambling activities, including receipts, tickets, and statements. Ensure that the records clearly show the amounts won and lost, and maintain a log of gambling sessions.

IRS Reference

IRS Publication 529, Miscellaneous Deductions

Relevant Industries

GamblingEntertainmentCasinos

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 10, 2025

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